TIOL-DDT 2202 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=17063"><img src="http://www.taxindiaonline.com/RC2/image/stories/limca_book2013.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font><font color="#663399" size="3">TIOL-DDT 2202</font><br> 03.10.2013<br> Thursday<font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></strong></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Settle Rebate Claims within 30 days - CBEC </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> has received representations from Trade bodies that field formations are not promptly sanctioning the rebate claims due to them. A suggestion has been made that the time limit prescribed in Section 11BB of the Central Excise Act, 1944 may be reduced from 3 months to 30 days. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board has examined the matter and notes that while the 90 days prescribed under Section 11BB of the Central Excise Act, 1944 is the outer limit after which interest becomes payable, there is nothing to prohibit processing and disposal of claims much earlier. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board informs the Chief Commissioners that all efforts should be made to ensure that the claims of rebate are disposed of within 30 days from the date of receipt of the claim complete in all respect, except those requiring pre-audit. Further, claims requiring pre-audit may also be processed expeditiously. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board wants the Chief Commissioners to put in place a monitoring mechanism to carry out these instructions. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">In some Commissionerates, the ‘REBATE' seats are so sensitive that only favourites are posted to such seats. It is so blatant that in transfer orders, they particularly mention ‘non rebate', so that the person posted there does not poke his nose into the sensitive rebate arena. In such sensitive rebate seats, rebate is never delayed beyond a few days. Usually, the "rebate claims" are lapped up in gluttony and officers even bid for claims that are in the pipeline. Delay occurs, if and only if, there is a dispute in the percentages, which are arrived on the basis of a formula envied even by Duckworth & Lewis! </font></p> <p><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=31&filename=notification/excise/2013/cir_267_2013.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBEC F. No. No. 267/39/13-CX.8, Dated: October 01, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">FTP - Amendment in the description of Import Item No. 2(b) of SION H - 42 </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN</strong> SION No. H-427 of Plastic Product Group (Product Code H) relating to export product "PVDC coated PVC film (containing 0.900 kg PVC film and 0.100 kg PVDC coating)", the description of Import Item No. 2(b) ‘Aqueous Dispersion of Vinylidene Chloride (Total solid content 60+/-1%)' is amended to read as "Aqueous Dispersion of Polyvinylidene Chloride (Total solid content 60+/-1%)". </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The item Vinylidene Chloride is the Monomer and Polyvinylidene Chloride is the Polymer of Vinylidene Chloride. The Polyvinylidene Chloride Polymer is to be used for the coating of PVC Film in the manufacturing process and is the correct nomenclature of the import item. That is why this amendment was necessitated. </font></p> <p align="justify"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2013/dgft13pn029.htm" target="_blank"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT Public Notice No. 29 / (RE-2012)/2009-2014, Dated: October 01, 2013 </font></strong></a></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax - Works Contract prior to 1.6.2007 - Matter goes to Five Member Bench of CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CAN </strong>a works contract be vivisected prior to 01/06/2007 and subjected to levy of Service Tax under "erection, installation and commissioning", "commercial or industrial construction", "construction of residential complex service" ? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In the following two cases, Tribunal had held that in the absence of works contract service having been enumerated as an independent taxable service prior to 1.6.2007, a service provided which is essentially in the nature of a works contract cannot be brought to tax under other, existing taxable services. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. <em>Jyoti Ltd. Vs. CCE</em> - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2007/2007-TIOL-2337-CESTAT-AHM.htm"><strong><font size="1">2007-TIOL-2337-CESTAT-AHM</font></strong> </a>and</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <em>CCE Vs. Indian Oil Tanking Ltd</em>. - <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2010/2010-TIOL-1015-CESTAT-MUM.htm"><font size="1">2010-TIOL-1015-CESTAT-MUM</font> </a></strong></font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Both the above cases were decided on majority opinion after reference to Third Member. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em>CCE Vs. BSBK Ltd</em>. - <font size="1"><strong>(<a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=44&filename=legal/cestat/2010/2010-TIOL-646-CESTAT-DEL-LB.htm">2010-TIOL-646-CESTAT-DEL-LB</a>)</strong></font>, a Larger Bench of the CESTAT held that Turnkey contracts can be vivisected and the discernible service elements therefore could be segregated and classified for levy of service tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently the Tribunal in <em>Larsen & Toubro Ltd vs Commissioner of Service Tax, Mumbai</em> - <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=ODkyNTM="><strong><font size="1">2013-TIOL-1138-CESTAT-MUM</font></strong> </a>referred to the Third Member the question whether a works contract can be vivisected even prior to 01/06/2007 and the service portion discernible in the contract can be subjected to levy of service tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, a Division Bench of the CESTAT has referred the matter to a Larger Bench of five Members, as there are conflicting views among Larger Bench decisions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Is a Third Member Decision equal to a Larger Bench Decision?: Tribunal held it is so and therefore the two Third Member decisions are also taken as Larger Bench decisions. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We will bring you this order tomorrow.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The following may be of interest. </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>1. <a href="http://www.taxindiaonline.com/RC2/print_story.php?newsid=3729">The Daelim dilemma! </a></strong></font></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=684">NO SERVICE TAX ON COMPOSITE CONTRACT</a></font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=4800">Service Tax on composite contract - Whether leviable? </a></font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6717">Post CBEC Circular on Service Tax - Are works contractors liable at all? </a></font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6659">Service Tax : The fine dividing line between indivisible contract and composite contract</a></font></strong></p> <p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=5534">Growing ambit of Works Contract as a taxable service </a></font></strong></p> </blockquote> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">I-T - No interest on interest - clarifies Supreme Court </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IN </strong>the famous <em>Sandvik</em> case - <a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=37&filename=legal/sc/2006/2006-TIOL-07-SC-IT.htm"><strong><font size="1">2006-TIOL-07-SC-IT</font></strong></a>, the Supreme Court held that the department is liable to pay interest on the interest which it had to pay the assessee and which it withheld. This judgement had serious repercussions not only in the Income Tax Department but also in the Customs and Central Excise Department. Several High Courts have granted interest based on the <em>Sandvik</em> judgement. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently a Larger Bench of the Supreme Court reconsidered the Sandvik case and observed, "<em>the aforesaid judgment has been misquoted and misinterpreted by the assessees and also by the Revenue. They are of the view that in Sandvik case (supra) this Court had directed the Revenue to pay interest on the statutory interest in case of delay in the payment. In other words, the interpretation placed is that the Revenue is obliged to pay an interest on interest in the event of its failure to refund the interest payable within the statutory period.</em>" </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court clarified, "<em>in Sandvik case this Court was considering the issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice caused to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this Court had come to the conclusion that there was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and therefore, directed the Revenue to pay compensation for the same not an interest on interest</em>." </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Supreme Court emphatically clarified, "<strong>it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest.</strong>" </font></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Please see</strong> <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTAwNzk="><strong><font size="1">2013-TIOL-47-SC-IT-LB</font></strong> </a></font></p> <p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Charitable Trust letting out stalls adjoining temple for selling toys, garlands, flowers, food etc. during Navratri festival not liable to pay ST as "Mandap Keeper" </font></strong></p> <p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SERVICE </strong>tax demands were confirmed on the ground that the appellants had provided service of ‘mandap keeper'.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Before the CESTAT, it is submitted that the appellants are a Charitable Trust registered under the Income Tax Act and engaged in the activity of managing the affairs of a temple; that during <em>Navratri</em> days, the devotees came to the temple and during this period, some stalls were let out (by calling for tenders) to different persons for the business of selling toys, garlands, flowers, food etc. in the open place adjoining the temple; and this activity does not fall under "mandap keeper" service. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Revenue representative submitted that as the appellants are arranging a <font color="#FF0000"><em><strong>social function</strong></em></font> in the form of <em>Navratri </em>festival the demands are rightly made.</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Bench observed -</font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em><font color="#663399">"5. We find that the demands are confirmed under the "mandap keeper service". As per the provisions of Sections 65(67) and 65(105) of the Finance Act, ‘mandap keeper' means a person who allows temporary occupation of a mandap for a consideration for organizing any official, social or business function. </font></em></font></p> <p align="justify"><font color="#663399"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. In the present case, even in reply to show cause notice, the appellants stated the facts that certain stalls are allotted to different persons for selling different items such as toys, garlands, flowers, food etc. and produced evidence in support of this claim. In view of this, we find merit in the contention of the appellants that the appellants are not covered under the scope of "mandap keeper service". The impugned orders are set aside and the appeals are allowed." </font></em></font></p> </blockquote> <p align="justify"><em><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Revenue doesn't leave anything to chance. But certainly, this order needs wide publicity as the Navratri festival is round the corner! </font></em></p> <p><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">See<font size="1"> <a href="http://www.taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=OTAwODU=" target="_blank">2013-TIOL-1450-CESTAT-MUM</a></font></font></strong></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> - Friday's cases</font></strong></font></strong></font></p> <p><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left">Customs</strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Customs - Export of meat - veterinary doctors certificates doubted - Customs demands duty - <em>Prima facie</em> Customs authorities cannot demand duty from exporters on any irregularity noticed by them and they should necessarily refer matter to DGFT - pre-deposit waived: CESTAT </font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IF</strong> Customs authorities find any irregularity in the exports, they have to report the matter to DGFT authorities for cancellation of the scrip issued to them and it is not within the jurisdiction of the Customs authorities to deny the benefit of said scrip. It is clear that to undo the effect precedent decision of the Tribunal, section 28AAA stands introduced in the Act but the same is only applicable prospectively and not retrospectively. The said section is to the effect that where instrument (defined in the Explanation) stand obtained by an exporter by means of collusion, wilful misstatement, suppression of facts etc., and such instruments are issued by the DGFT, duty can be demanded from the person who obtained such instruments by fraud and mis-representation. However explanation to said section clarifies that said section would be applicable to the use of such instruments after the date of ascent of the President. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">I-T - Whether as per scheme formulated by MoC in locating Software Technology Park, assessee can be deprived of benefits of Sec 10A solely by reason of it being in existence already, but became STPI subsequently - NO: HC</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> assessee is a Proprietary Concern engaged in Electronic Data Transmission (Data Processing). The assessee's Unit was in operation ever since 1994. The Assessee's unit was approved as Software Technology Park by the Government of India as 100% Export Oriented Unit for Computer Software on 27.03.2002. Considering its status as 100% Export Oriented Unit, the assessee claimed the benefit of deduction u/s 10A of the Act, particularly for the AY 2003-04. The issue before the Bench is - Whether as per the scheme formulated by the Government of India, Ministry of Commerce and Industry in locating the Software Technology Park, the assessee can be deprived of the benefits of Section 10A solely by reason of it being in existence already, but became STPI subsequently. And the verdict goes against the Revenue. </font></p> <p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Works Contract Service - whether composite contract can be vivisected to tax service portion prior to 1.6.2007 - Matter referred to Five Member Bench of CESTAT</font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SINCE</strong> there is a conflict of opinion between larger Bench decisions of this Tribunal <em>Jyoti Ltd; Indian Oil Tanking Ltd. and BSBK Pvt. Ltd.</em>, in the interests of precedential coherence, the issue whether a composite contract, involving transfer of property in goods and services which is taxable only from 1.6.2007, onwards and not earlier thereto, in view of the provisions of Section 65(105)(zzzza), could be vivisected and service components of such composite contract could subjected to tax by classification of such service components under other pre existing taxable services such as commercial or industrial construction service or erection, installation and commissioning service, construction of residential complex service etc. for the period prior to 1.6.2007, must be referred to a larger bench of five members. </font></p> <p><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our Columns Tomorrow for the judgements</font></strong></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day.</font></p> <p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com</strong></a></font></p> </body> </html>